GB Power secures ‘best solar rate in Caribbean’

Grand Bahama Power Company headquarters.


Tribune Business Editor

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Grand Bahama Power Company believes it has obtained “the best rate in the Caribbean” with its first solar energy deal with an independent provider, its top executive has revealed.

Dave McGregor, Caribbean chief operating officer for Emera, GB Power’s 100 percent owner, told Tribune Business in a recent interview that the agreement with Lucayas Solar Power is the first of four potential deals that will see independent power producers (IPPs) supply it with renewable energy from solar plants.

Besides reducing the utility’s reliance on fossil fuel, which will both benefit the environment and reduce foreign exchange outflows, he added that outsourcing potentially up to 18 percent of its generation needs to renewable providers will enable GB Power to invest in battery storage facilities and strengthen its transmission and distribution infrastructure so that it becomes more resilient.

GB Power is currently researching how much battery storage it requires to “optimise” its solar energy drive, and stabilise the grid by ensuring there is adequate power supply at night. Mr McGregor told this newspaper that the utility was likely to need to double its present 10 Mega Watt (MW) battery storage capacity within the next two years as more agreements with IPPs are struck.

“On an annual basis, with the weather we have on Grand Bahama, that probably could be 6 percent of our needs,” Mr McGregor said of how much generation capacity Lucayas Solar Power will account for. “This is 6 percent of our generation locked in at nine cents per kilowatt hour (KWh) for 25 years.

“We’ll buy solar power as long as it is generated to our standard, and at a price that customers can afford, and certainly nine cents per KWh is probably the best you’ll see in the region right now. The price we’ve negotiated is a very good price for the Caribbean. We’re very pleased with what we’ve managed to do here. We’re pleased and excited; excited for Grand Bahama’s future. We’re often accused of being a monopoly utility, but not on the generation side any more.

“We’re building the economy and investor confidence. That’s key. The way we’ve been able to do that, and what underpins that, is the regulatory framework between the Grand Bahama Port Authority (GBPA) and ourselves. That had the IPP concept built into it in 2012. The foundation was laid then for this, and I’m glad we’ve finally been able to leverage this for the benefit of Grand Bahama. The regulatory framework the GBPA implemented 10 years ago is underpinning this.”

Mr McGregor added that the same regulatory framework had also provided Lucayas Solar Power with confidence that its interests are protected, and that it will be able to recover its investment in a stable supervisory environment where its interests are protected. Negotiations with GB Power had taken about two years to complete, with the IPP’s solar installation likely to be completed and generating power around year-end 2023.

The agreement is for the construction of a $15m utility-scale solar project at two sites that will supply a combined 9.5 Mega Watts (MW) to the island’s electricity grid. The deal will see Lucayas Solar Power begin construction on the Devon and Fairfield plants this month. The build-out of the two sites, which will provide 4.5 MW and 5 MW, respectively, is set to create some 80 construction jobs and be completed by the 2024 first quarter.

Lucayas Solar Power will operate as an independent power producer (IPP) that sells the electricity it produces to GB Power, which will then distribute it to its customer base via Grand Bahama’s electricity grid. GB Power will purchase the solar energy produced by the plants at a locked-in price of $0.09 cents per kilowatt hour (KWh) over the duration of a 25-year power purchase agreement (PPA) with Lucayas Solar Power.

Mr McGregor described GB Power’s first solar deal as “another type of hedging; it’s physical hedging” as renewable energy will now substitute for and replace the fossil fuel variety. He added that the nine cents price was “comparable”, and slightly lower than the utility’s existing fuel charge, which is above 11 cents per KWh.

GB Power clients will, he added, see an additional line item in their bill once the Lucayas Solar Power project comes online. This will show how much they are paying for solar energy alongside the fuel charge, and Mr McGregor said the former will start to increase – and the latter decrease – as more renewable generation comes online via new IPP agreements.

“We’ve got three more in total,” he revealed of possible solar IPP partners. “We’ve got one more, and a couple in the pipeline that are not quite as advanced. I think that gets us to about 18 percent [of total power generation needs] if all those come on stream in the next two years. Then we need to figure out how to get to 30 percent, but at that point we will understand what our investment in battery storage will be.

“Really, to get beyond 25 percent, we already have some battery storage installed. We’ve had 10 MW installed, and we’re probably going to need another 10 MW of battery installed in the next couple of years. GB Power will take that on. We see that as our responsibility. Our responsibility is to keep the grid stable. We’re undertaking currently a study of when and how much battery storage we need to put in to optimise solar.”


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